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The cost of having children can be considerable. From the early costs of the pregnancy and delivery, to daycare, soccer lessons, orthodontist bills, and summer camps--the list never ends.

To begin to estimate the cost of raising a child, use MsMoney.com's Cost of Raising a Child Tool.

Life doesn't always give us the luxury of advanced planning for children, but it's never too late to reap the benefits of thinking ahead.

Financial Planning Steps to Take Now

Take the time to investigate the insurance coverage that your employer offers, and what type of prenatal care and delivery it covers.

Find out if you will qualify for disability coverage while you are out on maternity leave.

Check to see how much adding dependents to your medical plan will cost.

Start a special savings account earmarked for baby-related expenses like decorating a room, or buying clothes and furnishings.

Keep in mind that pregnancy can be expensive--think about borrowing clothes from friends, getting lower prices at consignment stores or prowling garage sales for used strollers, baby cribs, etc.

That's only the beginning. The major costs associated with raising a child starts after your baby arrives. Large expenses such as childcare can be just as significant as car payments or insurance costs. When all is said and done, raising a child can run into the hundreds of thousands of dollars, and paying for private school tuition can easily double that figure.

Reducing Childcare Costs



The high cost of childcare can strain any budget. Working couples can pay a whopping 10-20% of their incomes on childcare while their children are small. After taking a hard look at the cost of care, some couples decide that it makes better financial sense for one parent to take a few years off to stay home with the baby.

Luckily, the government offers several tax breaks to families with children:

  1. Pay with pre-tax dollars. You can significantly cut the cost of childcare by paying with pre-tax dollars. Check with your employer to see if this is available. The money will be taken from your paycheck before the tax is deducted.

  2. Take the childcare credit on your tax return. The government offers a tax credit that you can subtract from your tax bill at the end of the year. Unfortunately, you aren't allowed to use both the childcare tax break and the child tax credit.

  3. Save on childcare costs by forming a babysitting co-op in your neighborhood. These groups swap babysitting duties with each other on a pre-arranged schedule to give everyone an occasional break.

  4. Form a "Saturday Night Club" with other working parents. Here's the idea: four families with children of the same age agree to the following: Each couple takes turns watching all of the kids one Saturday night a month, leaving the other couples with three Saturday nights to themselves and save on the cost of babysitters.

Reducing Your Children's Spending

The more time you spend teaching young children good money habits and discouraging them from wanting needless things, the lower the financial impact their teen years will have on your family budget.

The best way to reduce the cost of the things that children want is simply not to buy them. By trying to instill healthy money habits and attitudes from the time children are very young, you will be able to save a great deal of money in the long run.

Raising money-smart kids pays off both financially and emotionally. When you take the time to teach your children how money works, why to save it, and how to make it, you are passing down important information about your family's values and beliefs.

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